Our hardships today stem from decades upon decades of bad government monetary policy.
If you feel like you're being watched , that's because you probably are.
And in the future, it may be a sure thing. "Tyler Durden" at ZeroHedge reports, "the Fed has just entered the counterespionage era and will be monitoring everything written about it anywhere in the world."
"Our old friends, the Federal Reserve Bank based in the United States...in a request for proposals filed to companies that are Fed vendors, is requesting the creation of a 'Social Listening Platform' whose function is to 'gather data from various social media outlets and news sources.'"Hm.
"It will 'monitor billions of conversations and generate text analytics based on predefined criteria.' The Fed's desired product should be able to 'determine the sentiment of a speaker or writer with respect to some topic or document'...The solution must be able to gather data from the primary social media platforms -- Facebook, Twitter, blogs, forums and YouTube. It should also be able to aggregate data from various media outlets such as: CNN, WSJ, Factiva, etc.' Most importantly, the Listening Platform should be able to 'handle crisis situations, continuously monitor conversations and identify and reach out to key bloggers and influencers.'"
We can only hope our We get identified as "key bloggers and influencers"! We may even be "reached out to"...
in a friendly way.....
After all, we've always said Ben Bernanke is a handsome genius. We've also repeatedly thanked the economic gods for central banks, which bring stability to our lives by creating wealth from nothingness and by keeping interest rates far below market levels...
Of course, we kid, good patrons. I have always been on the side of economic honesty...something that governments and their central banks vehemently oppose.
Call me odd, but I believe wealth is created by adding value, by improving the world in some way and bringing people stuff that they need is more important than what they want. We shake our heads and wag our fingers at market-distorting fictions like new "political" money and artificially created credit.
Any literary or Internet loudmouth subscribing to the Austrian school of economics is going to agree...and is going to come under this proposed surveillance. And one of the loudest is the honorable congressman Dr. Ron Paul.
Dr. Paul even penned a book whose title pretty clearly states his desire and ultimate goal: End the Fed. You don't get much more critical of an institution than calling for its immediate end.
Dr. Paul has managed to avoid jail so far. But who knows how the future will shape up for those critical of government and their pet money-creating monsters? The Fed's desire to monitor criticism could be the first step on an Orwellian path. In a couple of years, we may have to watch what we say if we want don't want any trouble...
But exactly what is the problem with the Fed? Why are the Austrian types always harassing and humbugging it? Turns out central banks really aren't banks at all.
I am going to make a number of obvious statements that we all can agree are true, but what they add up to is a startling conclusion. What we call "central banks" are not banks at all.
What is a bank? According to a helpful little essay on banks for students at ThinkQuest helpfully titled "What is a Bank?", a bank is a financial organization in which people deposit their money. A bank is a business. According to the aforementioned essay, "each bank tries to make THEIR bank look better than all of the other banks by offering services that some other banks might not have." That is to say, banks compete in a market.
This is true, conceptually at least, and also true to some extent in reality, although numerous banking laws seriously alter the market and the competition. But it is the pure idea we are after here, and in the pure idea, a bank is a business that competes in a market.
Top analyst warns:
"The United States is now in WORSE shape than Greece, Ireland, Spain, Italy or Portugal!
Historically, the Fed and other "central banks" came to be called "central banks" for several reasons. First, they are financial organizations. Second, they hold deposits of other banks and governments. Third, their assets are largely financial assets. Fourth, they make advances or loans to other banks on collateral. Fifth, the government has made them to be at the heart or center of the banking industry and the monetary system. Sixth, government power is itself centralized or national. All of these statements are factual.
Now, this is an imposing array of reasons why "central banks" are called "central banks." But the most important of these reasons is the fifth reason, which is that the government has used its power to make the "central bank" central. And because the government has used its power to create the "central bank" and make it central, we know that the "central bank" is not a free market institution.
This is the main ground upon which I challenge the notion that a "central bank" is a bank. The concept of "central bank" fails to distinguish a free market business and a bureau created by government power. The term "central bank" undermines this distinction between free market and government. Indeed, it erases it altogether.
The Fed is not a business. It has powers that no ordinary bank has. It has privileges that no ordinary banks have. It doesn't compete with other banks. Who created the Fed and the government gave it power to create fiat money. The government can alter the Fed's organization and powers at any time but doesn't. The Fed's so-called independence from the government is mythological. It is that of a dog on a long leash. The only independence the Fed has is from the public.
Let's go back for a moment to the essay on banks that I just cited, because it displays this erasing of any distinction between the free market and government. After defining the term "bank," it lists the kinds of banks. Quite suddenly, it introduces the term "central bank" in the same breath as ordinary banks that have national or state charters. It says, "There are different kinds of banks. There are national banks, state banks and central banks. The Federal Reserve Bank is the United States government's central bank. The Bank of England is England's central bank."
Suddenly, what this essay told us earlier disappears. We were told that a bank was a business that competed with other banks. But now we are told that the Fed "decides how much money is in circulation" and that it "may tell the [ordinary] banks to charge more interest or keep more money in 'reserve.'"
Obviously, if the "central bank" has such powers, it gets them from who. Just as obviously, the "central bank" is not a business and not in competition with other banks if it exercises these and other powers over ordinary banks.
Furthermore, distinctions between monies that ordinary free market banks deal in and the fiat money that central banks produce are completely glossed over and erased.
This is representative of the usual thought in the field of economics. Banks are businesses. But then, all of a sudden, there is another so-called "bank" that has an array of powers that business banks do not have. This "bank" is actually a government bureau. Its fiat money is made into legal tender by the government. The government states that it stands behind this money. This "bank" has powers to control and organize the ordinary banks into a cartel.
Are you prepared for the end of Social Security? It's coming faster than you think..
"A central bank, reserve bank or monetary authority is a public institution that usually issues the currency, regulates the money supply and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on printing the national currency, which usually serves as the nation's legal tender."
However, the same Wikipedia article almost immediately contradicts itself when it states: "Central banks in most developed nations are independent in that they operate under rules designed to render them free from political interference."
How can a bureau that is established by the government and possesses extraordinary powers be independent and free from political interference? The "central bank" embodies political interference!
"Central bank" independence is to a large extent a myth, that is, in the essence of the institution and in those activities in which it is not mythical, it is an unaccountable power.
It may seem as if I am splitting hairs, but what I see is that the common explanations of central banking confuse banking as might occur in free markets with so-called banking as executed by a "central bank" that is empowered by government. They are two entirely different kinds of operations. A thoughtful or questioning reader is bound to feel a degree of discomfort when he encounters these explanations that blur important distinctions.
A "central bank" is a government department. It is a government bureau. It is the government's fiat money bureau. The "central bank" is the government's money-printing machinery or money-printing organization or money-printing bureau or money-printing agency. As contrasted with monies produced in a free market, the Fed's money is state-produced "money." In the sense of comparing the Fed's money to free-market money, it is counterfeit. It is held up by the force of government law and power. It is imposed on the public.
A more accurate term for the Fed might be the "Fiat Money Administration." Perhaps the term "Monetary Authority" would be more accurate. It would be more accurate if the latter were the official name. In the U.S. Constitution, at least, it is clear that there is no power to create a Monetary Authority, and if there were such a power, it could not possibly be delegated in such a way as to make that Monetary Authority independent.
The "central bank" is not a real bank. Everything about it is permeated with government power. At the heart of the financial and monetary system of a nation that is supposed to be an exemplar of free markets is a government money-bureau.
There's no clearer way to say it. In the past, monarchical governments simply stole from their subjects via seigniorage. When they needed more money from their subjects, they'd call in coins, clip them and send them back out with the insistence -- on pain of death -- that everyone pretend that the clipped coins hadn't been clipped.
In the modern world, the central bank does the same coin-clipping function for its government. The method is a bit more convoluted, perhaps to make it look somehow benign and not like outright theft. And it seems to have worked! These days, everyone seems to believe currency debasement is a good thing.
Currency debasement is supposed to be a handy tool for extra-market forces (i.e., political ones) to smooth out markets. Newly created currency is used to buy government debt. This lowers interest rates so that borrowing money costs less. Newly created money also conveniently lowers the value of existing money -- the stuff in the public's pockets -- and discourages simple savings and encourages people to take greater risks with their money, just to outpace the rate at which that money's purchasing power is being destroyed.
Critics of central banks would point out that it's simple savings that form the basis for sustainable economic growth. Consumption-based debt, on the other hand, isn't so reliable. Debt is really just consumption of future wealth...and eventually, the future comes calling.
Money printing is one of the last efforts of a failing economy. One of the many signs of a crumbling empire, one which has seen its imminent end and no longer worries about its future.
The rest of us, however, do have futures to worry about, financial futures that no longer seem so certain because of government and central bank interference in the economy. The only cure is to take your lumps now and begin again. Call "do over" and be done with it, a process that central banks and governments would really rather avoid.
This is where Ron Paul is different. He recognized the perils of closing the gold window in 1971. He knew that the general public no longer understood the risks of fiat currencies, and he's been trying to inform the public ever since he took office.
Then in 1981, as a part of the Gold Commission, he penned what we now call Ron Paul's "Lost" Gold Bible. We say "lost" because the people who benefited from the Fed's existence had no interest in publishing Dr. Paul's findings, and quickly ridiculed and buried it. Then it was business as usual for bankers and politicians for the next 30 years.
And our hardships today stem from decades upon decades of bad government monetary policy.
As Dr. Paul puts it, "The entire process is a catalogue of broken promises and outright theft on the part of the federal government as it sought to substitute a managed, irredeemable paper money system for a gold standard."
The basis is that the same criminals did this to Canada in 1974. So what do you want to do about it?
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